Wednesday, June 21, 2017

The Life Cycles and Rejuvenation of Clusters

Clusters are not one time creations that grow and then burn out after a few decades. They can go on and on growing and transforming when properly managed. According to research in Competitiveness Review those clusters that have strong knowledge based, social capital and strong public policies can continue to grow and adjust through various life-cycles (Valdalio, Elola, & Franco, 2016).

While some aspects of the cluster may phase out there are often others that grow at the same time. A few die and a few grow making the cluster a living and vibrant organism. The entire cluster can die when there is not enough economic principles, such as knowledge, social and policy, are not in sufficient supply.

Knowledge: The innovative and skill level of organizations and employees.

Social Engagement: The social interaction that leads to shared knowledge and innovation.

Policy Management: The fiscal policies on a local, state, and national level.

Clusters are a lot like businesses that emerge, grow, sustain and eventually decline. With innovation and change they can continuously renew themselves. Some may adapt to the market while others renew their offerings to create additional growth. When multiple businesses are working together they transform the cluster.  

If we can understand the growth cycles of clusters we can start to understand how to manage them and sustain them over time. Attracting and training employees for greater knowledge, getting them to socialize in ways that share knowledge and spark opportunities, as well as providing proper policy development can go a long way. The environment and its management must meet the market demands to provide opportunities for growth.

Valdaliso, J., Elola, A. & Franco, S. (2016). Do clusters follow the industry life cycle?: Diversity of cluster evolution in old industrial regions. Competitiveness Review, 26 (1).

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